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Hawaii's Solar Energy Revolution

How the proliferation of solar panels on Honolulu homes will force Hawaiian Electric Co. to reinvent itself—or else.


(page 2 of 4)


  • Neighborhood: Manoa Cost of PV system: $22,500, after tax credits
  • Monthly electric bill before: $350
  • Monthly electric bill now: $17
“This is the second house we’ve installed solar panels on. We moved here in February, and it just made sense. The tax credits aren’t as good as they were the first time, but HECO’s rates are a lot higher now, so it balances out. We just got used to not having an electric bill. We’ve been thinking about adding more panels. Our hot water and our pool are powered by gas, so we could potentially replace those in the future.”

Even without the gloomy forecasts of its demise, HECO had a rough 2013. The utility’s five-year plan for meeting the state’s ambitious renewable energy goals was harshly critiqued by the state. HECO’s regulator, the Public Utilities Commission, filled by Gov. Neil Abercrombie with fresh appointees, asserted that it would no longer play the traditional role of rubber stamp. Robbie Alm, the long-time public face of HECO, stepped down in July, and by the end of the year he had yet to be replaced. On top of all that, Hawaii’s booming solar industry continued to load the electric grid with unprecedented amounts of intermittent PV power, enabling an increasing number of HECO customers to slash their electric bills.

The solar industry in Hawaii has quickly grown into a force to be contended with, roughly doubling in size each year from 2008 to 2012. Rapidly dropping PV prices combined with generous tax credits, the highest electricity rates in the nation and the abundance of Hawaii sunshine drove this meteoric growth and drew hundreds of contractors and other businesses—some more reputable than others—to the gold rush.

Installations peaked in 2012, when more PV was installed than in all the previous years combined. The industry slowed a bit as it entered 2013, thanks in part to new Department of Taxation rules that closed a loophole allowing homeowners to claim multiple tax credits for the same PV project. Then, last September, it slammed into a wall.

That’s when HECO announced that so much PV had been connected to parts of Oahu’s electric grid, some circuits simply couldn’t take anymore. Of the 416 individual circuits the grid comprises, 81 of them, or 19 percent, were saturated with solar, the utility said at the time. Adding more PV to maxed-out circuits raised the potential for voltage spikes, which could cause problems ranging from flickering lights to electrocuted powerline workers.


Even with generous tax credits—30 percent federal, 35 percent state—rooftop photovoltaic systems don’t come cheap. But they do come with financing options. Here’s the rundown.
Many homeowners finance their PV systems by borrowing against the value of their homes, either through home equity secured loans or through mortgage refinancing. Interest payments may be tax deductible.
The company that installs your PV owns your PV. It gets the tax credits, but you get PV without the steep upfront costs. The downside: You pay more in the long run.
The company that installs the PV on your roof owns the system and sells you the power. You pay a fixed rate below what grid power would cost.
A new on-bill financing program, Green Energy Market Securitization, was created by the state to help renters and low-income homeowners go solar. The system is paid off over time through monthly charges on the consumer’s electric bills.

From that point onward, HECO declared, would-be PV customers must contact the utility to find out whether or not there was room on the circuit for them before they installed their solar systems. If there was room, the customer might have to foot the bill for equipment upgrades to protect the grid. Furthermore, studies would have to be done before PV projects could proceed. How much the upgrades might cost or how long the studies might take, HECO couldn’t say. But according to reports from the Neighbor Islands, where HECO’s sister companies have implemented similar policies, customers were waiting 12 to 18 months to find out if they could even hook their solar systems onto the grid, and equipment upgrades cost them thousands of dollars.

Homeowners hoping to put PV on their roofs were thrown into solar limbo, with hundreds of planned installations put on hold. Solar contractors screamed foul. Legislators held briefings.

A group of stakeholders was assembled to explore workarounds that might allow the utility to scooch up the PV saturation threshold a bit. By the end of the year, though, no scooching had been announced.

In the meantime, the solar industry found its own workaround: batteries.

Off-the-grid hippies on the Neighbor Islands have been using them with their PV systems for decades. Why not Oahu residents in solar-saturated neighborhoods? As long as excess energy is stored in the batteries and not pushed back onto the grid, the reasoning went, the voltage spike problem was solved. So too was the problem of marketing PV in solar-saturated neighborhoods. A PV owner opting for batteries wouldn’t be able to participate in HECO’s net-energy-metering program, in which the excess solar watts a home produces are credited against whatever watts the home draws from the grid when it’s dark or cloudy. But that would hardly matter to someone on a maxed-out circuit who wanted solar badly enough.

With encouragement from the Hawaii Solar Energy Association, which held battery seminars last fall to bring its members up to speed, solar contractors began touting batteries as the solution to HECO’s roadblocks. “Get solar now,” one full-page newspaper ad read. “No waiting for utility approval. No added grid upgrade costs.”

“We are so much more flexible than the utility,” says Rolf Christ, HSEA’s secretary and owner of Hawaiian Island Solar. “If they throw one rule at us, we throw a solution back. Nobody can afford to just stop installing.”

Then HECO cleared its throat and clarified the rules. In the final days of 2013 it began running its own newspaper ads to explain that, as long as a home is still attached to the grid, batteries don’t change a thing. “PV systems with battery backup must also get an initial review by your utility to ensure the interconnection is done right,” the ad stated. “PV systems that are prematurely interconnected could be turned off by your utility.”

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